#夏日创作营

This Week’s Crude Oil Market Recap

1. Market Review: A V-shaped reversal, surging more than fifteen percentage points in a single week

This week’s international crude oil market is destined to be written into the 2026 market history books.

After Brent crude surged to a historic peak of $119.45 in March this year, the market then fell into a months-long bearish stretch. Oil prices slid from the high end into a trough of $70.13, a decline of as much as 41%. With bears holding sway and pessimism spreading everywhere, the $70 level seemed like the last fortress for bulls. However, just when everyone thought oil prices would languish at low levels and grind out a base, this week’s market delivered a textbook V-shaped reversal with thunderous momentum.

As of the weekly close for the week ending July 17, Brent closed at $88.35 per barrel, with a total weekly surge of 17.41%. During the week, the high reached $88.36 per barrel and the low fell to $77.28 per barrel. The weekly average price held steady at $85.28 per barrel. WTI crude surged in parallel, closing at $81.77 per barrel, up 14.35% for the week. Its week high was $82.07 and the low was $72.61, with a weekly average of $79.88 per barrel. Domestically, Shanghai crude oil’s SC main contract also refused to lag behind: the Friday close was 510.5 yuan per barrel, up 9.40% for the week. In the night session on the 18th, it once again jumped to 542.9 yuan per barrel—up more than 5% in a single day—forming a strong resonance with the international market.

On July 17 alone, Brent jumped 4.59% and WTI rose 4.47%, with both major benchmarks recording the largest single-day gains in nearly four months. Even after entering the weekend off-hours trading session, prices kept their strength. On July 19, Brent off-hours oil climbed more than 2.23% and briefly broke above $84; WTI off-hours oil surged more than 3%, showing just how feverish bulls were.

This was not a mild technical rebound—it was a violent surge ignited by a geopolitical nuclear blast.

2. Macro News: Fighting between the U.S. and Iran flares up again; the Strait of Hormuz hangs by a thread

The core engine behind this week’s oil price surge is, without a doubt, the full-scale escalation of the U.S.-Iran military conflict and the complete collapse of the ceasefire agreement.

Multiple sources disclose that after the ceasefire agreement became meaningless paperwork, the U.S. launched a new round of airstrikes against Iran on Saturday, targeting equipment that could be used to threaten shipping of merchant vessels through the Strait of Hormuz. Southern Iran’s Hormozgan Province was hit by three rounds of U.S. airstrikes that day, and 116 communication towers in the area were knocked offline due to the bombing. Tehran then retaliated by attacking Kuwait power plants and seawater desalination facilities, and claimed it had launched its first direct strike on U.S. facilities within Syria. What further chills the market is that Iran has urged Yemen’s Houthi forces to blockade the Strait of Mandeb, while the Houthis have previously posed a serious threat to shipping in the direction of the Red Sea.

The Strait of Hormuz—this vital choke point carrying about one-fifth of the world’s oil supply—is now seeing shipping nearly come to a standstill. Shipowners do not dare to sail into the Persian Gulf, and tanker throughput has fallen off a cliff. As Andrew Lipow, President of Lipow Oil Associates, put it: “The market is reacting to intensifying hostilities. If more tankers are hit and damaged, oil prices will keep rising, because shipowners simply do not want to go into the Persian Gulf.”

To make matters worse, although Saudi Arabia has already diverted most exports through cross-country pipelines to El Jadid Port along the Red Sea coast—where crude export volumes have surged from about 973k barrels per day year-on-year to around 4 million barrels per day recently, accounting for more than 70% of Saudi Arabia’s normal export volume—if the Red Sea route is also blocked, this “lifeline route” faces the risk of paralysis as well. PVM Oil Associates analyst Tamas Varga summed it up sharply: “This threat strikes at the heart of the matter.” The buffer space in global crude supply is being compressed to the extreme.

Funds flows are also sending strong signals. The market is forming a “crude oil + refined products” resonance bullish structure, with large amounts of capital piling into long positions in diesel and heating oil, pushing refinery margins to record highs. The U.S. crack spread has also hit a new high. Notably, CFTC positioning data has not yet included the portion of NYMEX financial crude oil futures contracts that is usually included in statistics, so the actual net speculative long increase may be more significant than the book figures. Even though the overall net long size remains historically neutral to low, capital has shifted from waiting to pressing bets, and the signals are clear.

On the macro policy front, the European Central Bank may hold off on the second rate hike next week, but it has not closed the possibility of a September rate hike. Previously, soaring energy prices prompted the central bank to raise borrowing costs in June. At the time, officials expected that U.S.-Iran peace talks could curb the impact of the conflict on euro-area inflation. But now with fighting flaring up again and the outlook for Hormuz shipping uncertain, inflation risks have returned to square one. In the United States, June CPI came in better than expected and unemployment fell to 4.2%. Economic resilience suggests demand won’t collapse, while sticky inflation cools expectations for rate cuts. The dollar stays resilient, further strengthening energy’s appeal as an anti-inflation asset. However, long-term worries in the U.S. labor market cannot be ignored: in June, the share of people seeking work for at least half a year reached 27.3%, nearing the highest level since the end of 2021. Nearly 2 million Americans have been unemployed for at least half a year, and this hidden risk could keep pressure on the consumption market and the sustainability of economic recovery.

In addition, on another geopolitical thread, the Ukrainian military said that on Thursday it carried out strikes on Russian refineries in the Yaroslavl region. While the marginal impact has not yet appeared, the parallel escalation of multiple geopolitical leads is building a highly fragile supply environment.

3. Technical Indicator Analysis: Dense bullish signals, but upside-band suppression can’t be ignored

Brent crude

From a technical perspective, this week’s Brent crude move is nothing short of a bull-market textbook:

- Bollinger Bands: The current price of $88.08 is extremely close to the upper band at $88.54. The middle band is at $78.15. Price is far above the middle band, placing it in a strong zone. But it’s essential to stay clear-headed: the $88.54 upper band acts as an immediate and strong technical cap. Whether it can break effectively will determine the ceiling height of the rebound.

- MACD: Shows clear bullish signals—the histogram bars are red and positive at 4.71. The DIFF line has crossed above the DEA line to form a golden cross. Bullish momentum continues to strengthen with no signs of exhaustion.

- Fibonacci retracements: The current price is in the key retracement zone of the huge drop from $119.45 to $70.13. The intense battle between bulls and bears here will determine whether this rebound is merely a brief oversold correction or the starting point of a trend reversal.

- Moving average system: Price is firmly above the 5-day, 10-day, and 20-day moving averages. The bullish alignment is intact, and the short-term trend upward is beyond doubt.

WTI crude

WTI’s trend is highly synchronized with Brent, but technical pressure is relatively lighter:

- Bollinger Band structure: The current price sits between the middle band at $74.30 and the upper band at $83.73, leaving about $2 of room to the upper band. In the near term, the probability of breaking the upper band is greater for WTI than for Brent.

- MACD red bars: Continue expanding, with the DIFF line crossing above the DEA to form a golden cross, suggesting better continuation of the rebound trend. Based on technical analysis from 英为财情, at 5-minute, 15-minute, 30-minute, 1-hour, 5-hour, and daily timeframes, WTI shows “strong buy” signals; the weekly timeframe is “neutral”; the monthly timeframe is “strong sell”—meaning bulls are strong short term, but uncertainty remains for the long-term trend.

- However, it must be watched carefully: for both Brent and WTI, the upper-band suppression of the Bollinger Bands is real and tangible. Brent at $88.54 and WTI at $83.73 are the two fortresses that near-term bulls must break. If they cannot break through and hold, a technical pullback is likely to follow. Meanwhile, considering the huge drop from $119 to $70, the current rebound is more the result of short-covering plus geopolitical premium overlay, rather than a fundamental-driven trend reversal.

4. Key Support Levels and Resistance Levels

For Brent crude:
- The first support is near $85, around the weekly average of $85.28—this is the key defensive line for bulls. If it fails, the second support will look to the $80 round-number level and the prior consolidation area. On the upside, the first resistance directly targets the Bollinger upper band at $88.54, the first major obstacle bulls must clear this week. If there is a strong breakout, the second resistance will target the $90 psychological level; once that is conquered, upside space will open again.

For WTI crude:
- The first support is near $78, around the intraday low on July 17. The second support looks to the Bollinger middle band at $74.30, which is the dividing line between bulls and bears. On the upside, the first resistance is the Bollinger upper band at $83.73, and the second resistance is the $85 round-number level.

Core logic lies in this:
- $70 is the “lifeline” for this rebound—it is the bottom support in the prior oversold area. If it breaks, this rebound is completely over. Meanwhile, the $88 to $90 range is a dual-suppression zone of the Bollinger upper band and psychological levels. A breakout would open imagination space toward $95 and even $100.

5. Outlook for the Next Phase: Geopolitical risk dominates; bullish in the short term, but lurking concerns remain

Short term (one to two weeks): bullish consolidation; watch for spike-and-retrace

The intensity of the U.S.-Iran conflict remains the only core variable steering oil prices. On July 18, the domestic refined products pricing adjustment has already taken effect: gasoline and diesel were both increased by 300 yuan/ton and 290 yuan/ton respectively, equivalent to about 0.25 yuan per liter. On the first day of the new pricing cycle, institutions estimate gasoline and diesel increases of 500 yuan/ton and 480 yuan/ton respectively, equivalent to about a 0.4 yuan per liter increase. If international oil prices do not drop sharply, July is likely to see a “two-in-a-row” increase.

From market sentiment, on July 19 off-hours oil prices continued to surge. Brent broke above $84 and WTI broke above $83. Bullish momentum is still ongoing. But it is crucial to stay highly alert: Brent above $88 already incorporates a large amount of geopolitical risk premium. Once the U.S. and Iran release signals of restraint at some point, or if there is a glimmer of hope for ceasefire negotiations, the premium piled up out of panic could be squeezed out rapidly, and any pullback could be extremely violent.

Medium term (one to three months): high volatility becomes the norm

After oil prices fell from $119 to $70, the technical picture is in an oversold zone and most of the short-covering rebound energy has already been released. The next move will depend on two scenarios: if the U.S.-Iran conflict further escalates, and the Strait of Hormuz is truly paralyzed even to the point that Red Sea shipping routes are disrupted, it would not be far-fetched for oil prices to challenge $100 again. Conversely, if the conflict eases, oil prices could fall back toward $80 or even lower levels, before seeking fundamental support again.

Worth noting is that this round of CFTC positioning data is missing the portion of NYMEX financial crude oil futures contracts, so the actual net long size could be higher than the book value. That means that if more capital enters later, there is still room for bulls’ strength to increase. On the other hand, institutions such as PVM Oil Associates have reminded that the alternative export route via Saudi’s Yanbu port is also threatened by Red Sea blockade risks. The buffer space in global crude supply has been compressed to the limit. This is both the basis for bulls’ confidence and the root of the market’s fragility.